Legal framework and regulation in the Nordics


Corporate forms, incorporation & others

(a) Limited Companies

The Swedish limited liability company (Sw. "Aktiebolag", AB) is the most common type of company organization in Sweden.

Swedish legislation provides for two types of companies with limited liability (joint stock companies):

Private Limited Liability Company (Sw. Privat Aktiebolag) and

Public Limited Liability Company (Sw. Publikt Aktiebolag)

Capital Requirement

For a private limited company the minimum capital requirement is SEK 50,000 compared to SEK 500,000 for a public limited company. The share capital may be stated in either SEK or in EURO. To have the share capital stated in EURO the company must have its accounts denominated in EURO as well. All shares in a limited company must have the same value, but the voting power may vary. No class of shares is allowed to have more than 10 times the voting power of another class of shares. All shares in a company must be fully paid up before the company can be registered. Only public companies may issue shares or other securities to the public. The company is not considered as a legal entity until it is registered with the Swedish Companies Registration Office (Sw. "Bolagsverket").

Branch office form is available but is not considered a separate legal entity. Other forms of incorporation are sole proprietorship, private partnership, general partnership, limited partnership, foundation and economic association.

  1. Corporate tax rate presently at 22%.
  2. Value Added Tax (VAT) 25% with a few exceptions.
  3. Employment contracts are mandatory.

Labour market is regulated by both legislation and collective bargaining agreements. Dismissal for cause or redundancy is possible, but will usually be negotiated with Trade Union. Wrongful dismissal could result in punitive damages of up to 32 monthly salaries.

(b) Sole Proprietorship (Sw. "enskild näringsverksamhet")

The structure is an unincorporated business, which means that it is not a separate legal entity and has only one owner. The owner has unlimited liability for all debts and there is no separation between the owner’s private and business debts.

(c) Private partnership (Sw. "enkelt bolag", "EB")

In a private partnership the business is conducted under a common business name and the partners are equally liable. As the private partnership is not a legal entity, it can neither hold property nor contract in its own name. It cannot sue under its own name in the courts, and similarly it cannot be sued under its own name.

(d) General partnership (Sw. "handelsbolag", "HB")

This partnership is based on an agreement between two or more partners (individual or corporate) and constitutes a legal entity The partners operate under a common name. The general partnership can hold property, can contract in its own name and can sue and be sued. The partners are jointly and severally liable for partnership debts. A general partnership must be registered with Bolagsverket, otherwise it will become a private partnership.

(e) Limited partnership (Sw. "kommanditbolag", "KB")

This partnership is a form of General Partnership but has, besides one or more general partners who are jointly and severally liable, one or more limited partners whose liability are limited to the amount of their capital contribution. It is usual that the general partner is a limited company. It enjoys the same property rights as a General Partnership and constitutes a legal entity. Private, general and limited partnerships are regulated by the General and Private Partnership Act (Sw. "Lag (1980:1102) om handelsbolag och enkla bolag", "HBL").